Building on and Strengthening the ACA: Private Coverage Provisions of the Build Back Better Act

On October 28, the House Rules Committee released its draft of H.R. 5376, the “Build Back Better Act.” The language represents weeks of negotiations among members of Congress and the White House. While the media has focused on the provisions that party leaders were forced to drop from the package (drug pricing reform, I weep for you), policymakers’ commitment to strengthening the Affordable Care Act (ACA), primarily through the extension of the American Rescue Plan’s enhanced premium subsidies, has never wavered. CHIR will be teaming up with our sister center, the Center for Children & Families, to fully summarize the bill’s coverage provisions once it is enacted, but in the meantime we wanted to highlight the wide range of policies designed to improve the accessibility and affordability of ACA marketplace plans. Christmas is coming early this year, folks.

  • Enhanced premium tax credits. The bill extends the American Rescue Plan’s (ARP) improved schedule of premium subsidies by an additional three years, to the end of 2025. This means that families with incomes between 100 and 150 percent of the federal poverty line (FPL) have their premium contribution reduced to $0 if they purchase a benchmark plan. Families with incomes over 400 FPL have their premium contribution capped at 8.5 percent. After 2025, the bill eliminates the adjustment of these premium contribution percentages based on inflation. The ARP premium enhancements enabled 2.1 million new people to sign up for coverage in 2021, and are projected to help over 3 million more.
  • Filling the Medicaid gap via the Marketplaces. The bill would help the more than 2 million people in the 12 states that failed to expand Medicaid obtain affordable coverage by making them eligible for premium tax credits and cost-sharing subsidies. Specifically, individuals with incomes between 0 to 138 percent FPL will be eligible for a $0 premium benchmark plan with a 94 percent actuarial value in plan year 2022. For plan years 2023-2025, cost-sharing assistance will increase so that these individuals may access a plan with a 99 percent actuarial value. Individuals under 138 percent FPL will be eligible for year-round open enrollment in the Marketplaces, and they cannot be denied access to tax credits because they have an offer of employer-based insurance. Beginning in 2024, Marketplace insurers will be required to cover non-emergency transportation and certain other services not typically covered in commercial health insurance. The bill also appropriates $105 million in funds for outreach and marketing and requires HHS to devote at least $10 million to the Navigator program in these states in 2022 and $20 million for 2023, 2024, and 2025. It also creates a temporary reinsurance fund in these 12 states to help mitigate any market instability. It also includes incentives for the states that have expanded Medicaid to retain their expansions.
  • Improved access for those with unaffordable employerbased insurance. Currently, individuals with an employer plan whose premium does not exceed 9.83 percent of their household income are considered to have an “affordable” offer of coverage and thus are ineligible for premium tax credits. This bill would reduce the affordability threshold to 8.5 percent and eliminates the requirement that HHS adjust it each year for inflation.
  • Reconciliation relief. If individuals under 200 percent FPL mis-estimate their income, such that they receive more in premium tax credits than what they are eligible for, this bill would cap the amount they owe the IRS at $300. Furthermore, individuals under 138 percent FPL would be exempt from repaying any excess premium tax credits, and they cannot be denied premium tax credits if they fail to file a tax return and reconcile their past year’s premium tax credits.
  • Extra help for the unemployed. The bill would extend the ARP’s provisions providing additional premium tax credit and cost-sharing assistance to individuals who have received or been approved to receive unemployment benefits. From 2021 through 2025, such individuals will receive tax credits and cost-sharing help as if their income is 150 percent FPL, regardless of their actual income. This means they will be eligible for a $0 premium benchmark plan with an actuarial value of 94 percent.
  • Expanded consumer assistance. The bill provides $100 million over four years ($25 million each year) for state-level consumer ombudsmen programs. These entities help consumers resolve insurance problems and, importantly, can be an important source of education and assistance related to the No Surprises Act, which goes into effect on January 1, 2022.
  • Creates an “Improve Health Care Affordability Fund” to provide grants to states ($10 billion per year, for 2023-2025) for either a reinsurance program or to reduce consumer cost-sharing in marketplace plans. States that drop their Medicaid expansion would not be permitted to apply for these funds.
  • Increases subsidy eligibility through “MAGI” adjustments. Eligibility for premium tax credits and cost-sharing subsidies is based on “modified adjusted gross income” or MAGI. Multiple sources of income are included in MAGI, including wages, tips, capital gains, social security, investment income, and more. This bill would allow people to discount lump sum social security payments. They can also discount income from a dependent under the age of 24, so long as the aggregate amount of dependent income is less than $3500, indexed for inflation. These changes will be available for plan year 2023.
  • Expanded enforcement of mental health and substance use disorder parity. The bill authorizes the imposition of civil monetary penalties on plans and insurers that violate the Mental Health Parity and Addiction Equity Act.

For information on the bill’s Medicaid provisions, check out my colleague Edwin Park’s blog post here. The two of us will be doing a deeper dive when the bill is enacted, so stay tuned!

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